dswoodley said:
Max out the memory allocation to 512mb and the VRAM to 16mb and the performance for those things should be tolerable.
Actually this is the exact opposite of what you should do for the best VirtualPC performance with Windows as the client OS. Totally contrary to what you'd expect, it's far better to restrict the VPC virtual machine to just 256MB of RAM.
If you allocate a lot of memory to the virtual machine, Windows ends up allocating its own cache pools to cache files it's reading from the virtual disk image. This is, of course, in addition to the caching being done at the OS X level resulting in double-caching. Apparently this significantly harms performance.
Microsoft recommends allocating only 256MB of RAM to the virtual machine. 256MB is a magic number for Win2K or XP, the threshhold at which (and below) the Windows kernel runs in a lean, tight resources mode which doesn't do much of the caching that Windows will want to do if it thinks it has more RAM available.
While it seems nonsensical, it actually works out quite well. Even if the virtual machine thinks it's swapping to disk, that "swap file" ends up being cached in RAM at the OS X level and is much faster than it would be if Windows is allowed to grow into a larger memory footprint.
Also, if you're seeing sluggishness with mouse and window operations, make sure you're running the client-side drivers that Virtual PC expects. If you've installed from the VPC+XP bundle this is automatic, but if you installed from normal Windows XP install media, you'll need to install the VPC drivers after you've installed Windows. Neglecting this will result in sluggish mouse and video.